Diamond City is located on the south shore of Bull Shoals Lake between east and west Sugarloaf Creeks.

According to the United States Census Bureau, the city has a total area of 2.68 square miles (6.9 km2), all of it land.

Arkansas State Highway 7 reaches its northern terminus at Bull Shoals Lake at the northern edge of Diamond City at a state maintained park and privately owned marinas.

As of the 2020 United States census, there were 757 people, 459 households, and 288 families residing in the city.

[6] The climate in this area is characterized by hot, humid summers and generally mild to cool winters.